Hike reaping more for less


Tokyo – Since Japan’s sales tax rose to 8% on April 1, 2014, I’ve noticed some changes, particularly in the way prices are shown. Major supermarket chains jumped on a legal revision to show prices less tax before the hike. Before, it used to be mandatory to display tax inclusive retail prices throughout the country, but today, we get tax exclusive prices, along with the more familiar tax inclusive ones in parentheses. Conditioned to non-bracketed figures, a shopper’s mind will register the lower prices, even as it recognizes the significance of the bracketed (tax inclusive) figure in peripheral vision.

Not that I don’t get along with the number 8, sharing the same sound as prosperity in Mandarin, it’s the best number businesses can wish for. That has rung true here in Japan. Even as Starbucks has taken a slight hit on its tall-sized beverage, which now costs not 15 or even 20 but just 10 yen more at 350 yen, elsewhere, math seems to be an urgent subject for revision. Haircut chain QB raised its flat 1000 yen cuts by 80 yen, even as they offered the old price for senior citizens on weekdays. Vending machine prices have also gone up by a dime, which is around 8%. Well, at least we all know who’s counting their pennies here.

Cents really do matter in Japan, a country famous for clockwork train services and attention to detail. After years of molding 5% prices and making them attractive propositions, the 3% hike has created mental challenges and added unwieldy change in our pockets. Imagine trying to keep your shopping under 1000 yen by grabbing groceries for 94, 380 and 460 yen, tax exclusive, preparing a nice bill in line, and ending up having to find another 8 yen. Try ruffling through loose change under the anxious gaze of other people in the queue. I’d probably give up, pay with the nice 1000 yen bill plus a 10 yen coin hastily retrieved from my already bulging store of coins. The mint in Hiroshima has done shoppers no favours, ending its four-year break to meet an expected surge in demand for 1-yen coins.

Toll fares also rose on the same day, or rather expressway operators chose to change their discount scheme to charge daytime drivers more. A night drive from Tokyo to neighbouring Yokohama on the Tomei expressway is now 30% more expensive unless you passed the toll gates after midnight. That’s another huge blow to logistics companies who will have been scratching their heads for answers to gas prices that have been flying through the roof since the yen began its slide.

Drivers aside, I can see shoppers swarming to limited time offers and daily bargains at supermarkets. The Uniqlo phenomenon is proof of thrifty shopping habits: a prolonged campaign of weekend hard bargains means Uniqlo shops are empty the rest of the week. It’s not hard to see people ask whether anyone would buy a garment that is not a rock-bottom offer. I can see businesses timing their own hikes with the government’s before slashing them again for offers, but that’ll only add fuel to swarming in a society already known for its herding habits. Maybe it’ll help companies manage inventories better, but cultivating such consumer habits will not bring long-term benefits.

The papers have reported a 2.7% CPI gain in Tokyo in an overall positive outlook for the Japanese economy. However, some observers remain cautious and have indicated that it was driven by the tax hike. The evidence is there for all to see, if you look hard enough at the prices in parentheses. Focus and attention to detail (and offers) will obviously be the mantra for discerning shoppers. For now, I will sit back and watch how things pan out before the next 2% hike hits consumers again in October next year.

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